Investors looking for stocks in the Semiconductor - General sector might want to consider either Screen Holdings Co., Ltd (DINRF) or STMicroelectronics (STM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Screen Holdings Co., Ltd and STMicroelectronics are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DINRF has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
DINRF currently has a forward P/E ratio of 11.30, while STM has a forward P/E of 22.50. We also note that DINRF has a PEG ratio of 1.13. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. STM currently has a PEG ratio of 4.50.
Another notable valuation metric for DINRF is its P/B ratio of 1.11. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, STM has a P/B of 3.23.
These are just a few of the metrics contributing to DINRF's Value grade of A and STM's Value grade of C.
DINRF stands above STM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DINRF is the superior value option right now.
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